UAE Labour Law: 6 Salary Payment Options and How Wages Can Be Paid
The UAE labour market attracts thousands of expatriates each year, drawn by the high standard of living, better career opportunities, and the benefits of tax-free income. This influx contributes to the country's diverse workforce, driving its economy and making the UAE a hub for international talent and innovation.
To ensure a flexible and fair working environment, the UAE's Regulation of Labour Relations Law allows employers and employees to agree on various forms of salary payment. This regulation safeguards the rights of both parties while accommodating diverse work patterns, depending on the nature of the employment contract recognized by the Ministry of Human Resources and Emiratisation (MoHRE).
Here are the six recognized wage payment forms in the UAE labour market:
1. Monthly Wage: Workers receive their wages monthly, as stipulated in their employment contract. This includes basic salary, bonuses, and allowances.
2. Weekly Wage: Workers are paid weekly, ensuring quick cash flow and more flexible wage management for the company.
3. Daily Wage: Workers are paid for each day worked, typically used for temporary or seasonal jobs.
4. Hourly Wages: Payment is based on the number of hours worked, with rates determined by experience, skills, and job nature.
5. Commission-Based Wage: Common in sales and certain service industries, where income is based on a percentage of the value of goods or services sold.
6. Piece-Rate Wage: Payment is determined by the amount of work completed or units produced.
When Should Employers Pay Salaries?
According to UAE labour law, employees’ wages are due on the first day of the month following the end of the period specified in the employment contract. If no period is specified, employees must be paid at least once a month. Employers are in default if they do not pay within 15 days after the due date, unless a shorter period has been agreed upon in the employment contract.
How Salaries Should Be Paid
The UAE government's Wage Protection System (WPS) provides a safe, secure, and efficient mechanism to ensure timely payment of wages to employees by their employers. All employers registered with MoHRE must subscribe to the WPS and pay wages through it as per the due dates. Salaries are transferred to employees' accounts in banks or financial institutions authorized by the Central Bank of the UAE. MoHRE does not process transactions or deal with companies not registered with the WPS until they comply with the system.
Payment can be made in Emirati dirham or any other agreed currency as specified in the employment contract. The government imposes penalties on companies failing to pay wages on time.
Minimum Wages in UAE
The UAE Labour Law does not stipulate a minimum salary. However, it broadly mentions that salaries must cover the basic needs of employees.
By providing multiple wage payment options and enforcing timely salary payments through the WPS, the UAE ensures that both employers and employees maintain a fair and protected working relationship, promoting a balanced and efficient labour market.
By: Sahiba Suri
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